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Walmart Supply Chain Management 2.0

Autor:   •  February 25, 2012  •  Case Study  •  1,082 Words (5 Pages)  •  1,693 Views

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Walmart; Supply Chain Management 2.0

The USDA defines sustainability as it relates to agriculture as; "a whole-systems approach to food, feed and other fiber production that balances environmental soundness, social equity, and economic viability among all sectors of the public" (National Agricultural Library). It should be inherently understood the sustainability must be global, timeless and accessible to all living things. Walmart, hoping to capitalize on growing public interest for "locally grown", announced its sustainability initiative. In their sustainability goals, Walmart addresses economic viability pledging to increase the income of small farmers by 10 to 15 percent, social equity focused on doubling its sale of locally purchased food products and environmental integrity committing to train 1 million farmers in sustainable farming practices ("Sustainability Fact Sheet"). It's a win-win! Not so fast. Based on these goals, Walmart's sustainability initiative by definition is fundamentally flawed and not sustainable.

Keeping the definition of sustainable agriculture in mind, Walmart's sustainability initiative must be balanced. That said Walmart most likely ranks environmental and social interests well below profit, a direct conflict to the definition of sustainability. Walmart's business model is simply paradoxical to their sustainability initiative. For example the investment in locally grown may save Walmart money by reducing the supply chain footprint, i.e., decreased distance from farm to shelf reducing shipping costs, thus allowing them to offer lower prices to the consumer. With increasing fuel and transportation costs, locally grown food will most likely continue to have an advantage. However Walmart will most likely gain leverage in setting wholesale prices. How? By Controlling, modifying and manipulating supply chain management. Subsequently any additional profit realized by reducing the supply chain footprint will add to Walmart's bottom line rather than the farmers. Don't be fooled though, this is more about supply chain management than sustainability and if profitability isn't in the equation then Walmart is not interested. Not convinced?

Recently Walmart has refused to buy local in South Africa due to an imposing local procurement quota that is a condition of a merger between Walmart and Massmart. Walmart believes Massmart is a launching pad for all Africa. Massmart currently buys 60 percent of its goods from local South African manufacturers and farmers. If buying locally from South African producers became a condition of the merger, they would not move forward with the merger. Wal-Mart would replace local production and trade with its own global supply chain, importing goods and products into a country with a 25% unemployment rate which could cost the country 4,000 jobs (Mitchell). Social equity? More like

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